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Attorney general calls for end to fixed-payment gas plans

The programs are intended to offer price certainty for gas customers worried about prices going sky high. CenterPoint Energy began its No Surprise Bill program in 2001. Currently about 40,000 CenterPoint customers are in the program.

Meanwhile, Xcel's Fixed Monthly Gas Payment program, which is two years old, has some 10,000 participants.
But attorney general Swanson says the deals are stacked against consumers. Swanson says the programs have cost Minnesota consumers about $26 million.

According to Swanson, "the product really amounts to a type of insurance policy -- if you will -- where the consumer is kind of buying insurance against a future increase in gas prices. And virtually every year every consumer has ended doing worse under the program than they would have done if they had not been under the program."

Swanson says that ratepayers enrolled in the programs almost always locked in prices that ended up being higher than eventual market prices. Swanson wants Xcel and CenterPoint to pull the plug on the programs.

"The programs are flawed and ought not be allowed to continue. And there'll have to be in place a mechanism for consumers exiting the programs as well."

Swanson says many consumers were confused about what the programs do and how difficult it is to quit them after enrolling.

Xcel Energy spokesman Tom Hoen says at this point, there are no changes to the program and none are likely before July. But he says resolution of Swanson's concerns is in the works. What form it will take is unclear.

"Whether that means altering the program or possibly canceling the program at the end of this program year, that will be up to our regulation folks and the attorney general's office," Hoen says.

The Minnesota Public Utilities Commission, which regulates the utilities, asked the attorney general's office to investigate both the Xcel and CenterPoint Energy programs last month.

Janet Gonzalez is the energy unit manager at the PUC. Gonzalez says many of the details about how to end the program still need to be worked out.
"The details of what -- who would be allowed to exit the program this year -- it seems there's an agreement in principle for LI-HEAP -- Low Income Home Energy Assistance customers who are getting federal heat dollars would be able to exit the program. They were talking about what other customers might be able to exit the program this year without penalty," Gonzalez says.

Xcel's Tom Hoen defends the program, saying the potential benefits and risks are communicated to customers.

"We never marketed this program to the customer as a way they would save money. It was clear in all the materials they received that they could save money and they could lose money."

CenterPoint Energy also says there is no change in how the company is offering its fixed price program. Company spokesman Rolf Lund also says gas customers knew they could either win or lose with the program.

"There have been more years than others where customers may have paid more than they would under standard billing. That's simply a product of what the weather did and gas prices did. Had it been colder than average weather and had natural gas prices been higher than anticipated, it would have been a different situation," Lund says.

But Pam Marshall, executive director of Energy CENTS Coalition, a nonprofit advocacy group, says many people didn't know what they were getting into. Marshall said the programs were especially tempting to poor people terrified about having to cope with rising energy prices.

"There was confusion about what they were signing up for. A lot of people thought it was the budget plan. In a lot of cases, I'm sure sure customers thought they were hedging their bets. And we just don't think it's the role of a regulated utility to offer those kinds of risky programs to their customers," Marshall says.

The Public Utilities Commission is scheduled to meet July 3 to discuss the future of the Xcel and CenterPoint pricing programs.